Cost Implications for Automaker Compliance of Zero Emissions Vehicle Requirements

While there are many automotive regulations in the United States, few studies in the literature examine the interaction between different rules. We investigate the cost implications of enforcing the national Corporate Average Fuel Economy (CAFE) and greenhouse gas (GHG) emissions standards and the Zero Emissions Vehicle (ZEV) requirements simultaneously. We construct a new “Cost Optimization Modeling for Efficiency Technologies” (COMET) to understand how vehicle manufacturers implement fuel economy technologies to comply with multiple regulations. We consider a variety of scenarios to measure the interaction between regulations and how they may lead to changes in technology costs. In 2025, unit costs reach $1,600 per vehicle on average to comply with CAFE/GHG and increase to $2,000 per vehicle on average to comply with both CAFE/GHG and ZEV. Unit costs for both regulations are less than the sum of the two because vehicles produced to comply with the ZEV program count toward compliance with the CAFE.